Amidst economic challenges, housing market ends 2020 on a high note
Monday Jan 04th, 2021Share
With December sales of 1,199, this is the highest December total since 2007.
"Housing demand over the second-half of 2020 was far stronger than anticipated and nearly offset the initial impact caused by the shutdowns in spring. Even with the further restrictions imposed in December, it did not have the same negative impact on housing activity like we saw in the earlier part of the year," said CREB® chief economist Ann-Marie Lurie.
Attractive interest rates along with prices that remain lower than several years ago have likely supported some of the recovery in the second half of the year. However, it is important to note that annual sales activity declined by one per cent compared to last year and remain well below long-term averages.
New listings in December increased by 11 per cent. However, the number of sales exceeded the number of new listings in December contributing to further declines in inventory.
Reductions in supply and improving demand in the second half of the year have contributed to some of the recent price improvements in the market. However, the recent gain in the benchmark price was not enough to offset earlier pullbacks as the annual residential benchmark price in Calgary declined by one per cent over last year.
The pandemic has resulted in a significant shift in economic conditions, yet the housing market is entering 2021 in far more balanced conditions than we have seen in over five years. This will help provide some cushion for the market moving into 2021, but conditions will continue to vary depending on price range, location, and product type.
HOUSING MARKET FACTS
Stronger sales in the second half of the year were enough to offset earlier pullbacks as detached sales totalled 9,950, just slightly higher than last years' levels. Despite the modest gain, detached sales activity remains at the lower levels recorded since the stress test was introduced in 2018.
Supply adjustments is causing sellers' market conditions for detached homes across all districts except the West and City Centre. This has helped support some price recovery in the market over the past several months.
Annual city-wide price remains relatively flat compared to last year, but there were notable annual gains in both the South and South East districts which both recorded price gains of nearly two per cent. Despite some of the annual shifts seen, prices remain well below previous highs in all districts of the city.
Sales growth in the North East, North, West and South East district were offset by declines in the City Centre, North West, South and East districts. Sales this year of 1,663 were similar to levels recorded last year.
While sales did not improve across each district, there were reductions in supply across all districts and is helping to reduce the months of supply.
These reductions are starting to impact prices, but it was not enough to offset earlier pullbacks. City wide semi-detached prices eased by over one per cent in 2020, with the largest declines occurring in the City Centre, North West and West areas.
Slower sales in the west district were not enough to offset the gains recorded in the rest of the city. Row sales totalled 2,145 in 2020, nearly two per cent higher than last years' levels. Despite the gains, levels continue to remain below long-term averages for the city.
Rising sales were generally met with a reduction in supply. This is causing the months of supply to trend down, especially over the second half of the year.
The decline in the months of supply was enough to help support some stability in prices. However, the adjustment did not occur soon enough and annual prices eased by nearly two per cent compared to the previous year and remain nearly 14 per cent below previous highs.
Price adjustments did vary depending on location. The steepest decline occurred in the North East with a year-over-year decline of five per cent. The strongest gain occurred in the West district with a two per cent rise.
Sales this month were the best December since 2014. However, it was not enough to offset earlier pullbacks as apartment condominium sales eased by ten per cent in 2020. This is the slowest year for apartment condo sales since 2001 and the only property type to record a significant annual decline in sales.
Unlike other property types, supply levels have not adjusted in the same way and this segment remains oversupplied. Prices have trended down over the past two months due to excess supply. On an annual basis, the benchmark price declined by over two per cent this year and is over 16 per cent below the highs set in 2015.